Adient plc (ADNT) Earnings Call Transcript & Summary

Thanks, everybody, for joining us for the next session. We're very happy to have Adient, a leading seating supplier, that over the years has gone through some major improvements from missteps from a long time ago. There's still some opportunity to make some fundamental improvements. There's some opportunity for some old contracts to roll off and sort of the new price and much better contracts to roll on. I think the current management team has designs on doing even more over time, which we're going to get into in this session. We're very happy to have Jerome Dorlack, President and CEO; as well as Mark Oswald, the newly appointed CFO. So guys, thank you very much for joining us today. We've got a whole host of questions, but I think we'll turn it over to you, Mark, to kick off.

Perfect. Thanks, John, and thanks for having us today, and thank you guys for joining us this morning. So we just wanted to open up with one quick slide. We're getting a lot of questions and typically do at this time of the quarter, just in terms of what we're seeing play out in fiscal year '24 versus expectations heading into the quarter. And we're not here to talk financials. We'll obviously report our second quarter financials, first part of May. So we're not going to talk about guidance, reaffirm or change guidance at this point. But wanted to give a little bit of background, a little bit of color just in terms of the expectations heading into the fiscal year versus where we stand at, let's just say, the midpoint. And so you can see, on the far left side of the slide, the expectations, right? So we knew that we're going to have a heavy launch load this year. We just knew there was certain of the high-volume platforms that we had that we're going to be launching, whether that was Tacoma, General Motors, the Traverse, Acadia, Ram. Those are in launch as we expected. Volumes were expected to grow. And then we called out a certain of what I'd call the headwinds, whether it was the FX with the peso, whether it was the footprint changes that had an impact on equity income. And then we also said that business performance was going to be a key driver as we went through the year to offset certain of those headwinds to give us the margin improvement this year as we went through '24. And for the most part, if I think about what's changed, it's really been volumes as being the key driver. And as I spoke about the launches and the heavy cadence of launches, what we're seeing, and you've seen it on certain of the S&P production forecasts, certain of those launches are taking a lot longer to run up their launch curve. So the customers are running at a lower rate than expected. So as we look at the second half of the year, we're anticipating them to get up to rate, start to run. But again, it's been a, what I'd say, a very challenging period having them get to where they are today. And then as you've seen the different articles on EV production, obviously, EV demand, EV volumes, if -- sort of what I'd say plateaued, they've been coming down, you've noticed certain of the vehicles, whether it's the Mustang Mach-E taking production out, high inventories, Blazer EV, Lightning, right? So again, it's those impacts that are different from the expectations heading into the year. I will say, on a positive note, business performance continues to track ahead of schedule, right? So things that we can control within our 4 walls, whether it's business improvement, whether it's continuous improvement, whether it's the modularity type programs that we've talked about over the past quarter or 2 quarters, we continue to drive the process internally to help mitigate certain of those volume headwinds that we're experiencing. So again, just to level set of where we are today versus expectations and, John, and more than happy to take the conversations anywhere you want to go at this point.

Sure. I mean maybe to follow up on some of that, Mark, I mean the one thing that we're hearing is that EV volumes were obviously a little bit slower. Are those launch -- the slower launches than expected EV specific, or are they kind of across the board?

They are. They're more focused on the ICE platforms, right? So if I think about certain of the high-volume platforms that were impacted by Traverse, Acadia for example, with General Motors, that's their ICE. If I think about Tacoma, it's their ICE. If I think about Ram, ICE, right? So you've got this, what I'd say, double-edged sword with certain of the ICE platforms not getting up the launch curve as anticipated, as well as the headwind now from the EVs that have been slowed or at least stalled in terms of where that production is heading.

Okay. And then maybe a second sort of next follow-up to that, as the EV volumes are being pushed down into the right, and that might be on programs and that might be on launches over time, there's an expectation, at least that we have that the market in aggregate holds in, which would dictate that you'd have to have something backfill there, which would be just in ICE programs. As you're seeing schedules 13 weeks out or whatever you guys are seeing, are you seeing any of that backfilling coming in? Or are the discussions from the automakers, "Hey, we're not making these EVs or the Blazer EV is getting pushed out or down, I should say, we're going to make more of the ICE vehicles that would satiate demand," is that happening at all?

Maybe certain platforms is very lumpy, I'd call it, right? So if I take Adient-specific, right, if I take the Lightning, for example, as demand for that has fallen, Ford has said they'd like to drive and produce more of the ICE, but they're having problems with their '24 launches for their ICE, right? So we're not seeing that benefit offset that, right? If I look at General Motors, for example, just with the Traverse, Acadia, that's a nice platform. They don't have something else that they could backfill into that, right? So I'd say it's in pockets. But from the Adient specific and what's impacting us right now, we're not seeing that, what I'd say, that offsetting benefit from -- coming from another platform.

I mean maybe to broaden it out though a little bit, I mean, we are running with our penetration forecast for EVs in the U.S. this year is 10%. Early in the year, it's running at 7% -- it's running at 7%. So let's say, we kind of end the year, there's risk that it's 10% or maybe even lower, we'll see what, is a year. So that gap of 3 points, it was pretty significant in the market, and we're talking about 0.5 million units. Do you think the industry, and this may not be something you're seeing in the schedules, so might be based on experience, would be backfilled for ICE -- with ICE vehicles? And then once again, it's not one-for-one replacement and the like. But the consumers are asking or demanding and wanting to buy these vehicles, that that would actually come in? Or is that something that's too early to call? And that's based on more -- probably more experience than what you're seeing.

Yes. I mean I think at this point, I think the consumer demand is there at kind of a $16 million SAAR. But you also have to look at days on hand and how much of that would be pulled also from days on hand potentially versus vehicle production. And so that's -- and we don't necessarily see that at the moment in what we're being called off on. To Mark's point, we only see what's kind of in the Adient production schedules as well. So if you look at some of our days on hand on the platforms that we service, they're pretty significant, 100 days plus on some of them. And so some of that could be satiated out of days on hand as well versus actual vehicle production. So I think that 0.5 million gap can absolutely be filled. It's just a question, will it be filled from days on hand versus actual production numbers?

Got it. Okay. And if you think about sort of the mix here, maybe short run and long run, on the ICE versus EVs as we're thinking about maybe EV programs being delayed, generally, what kind of content delta are you -- you guys have between ICE and EVs? Or is that an oversimplification that there might be sort of a broad swath way to think about that?

In terms of content per vehicle?

Yes.

I mean, our content per vehicle, so it's interesting when we used to have these discussions 3, 4 years ago, there was a pretty large discrepancy in terms -- the EV is generally at a much higher content per vehicle. As we've seen the next-generation EVs come in to the market, whether that's Blazer EV or some of the other platforms we participate on, those levels have now really started to normalize in terms of EV content per vehicle versus ICE content per vehicle in the United States or in the Americas market. In Europe, again, I'd say you see those levels starting to generally normalize now between EV and ICE content per vehicle. In China, however, and in Asia more broadly, generally, you see much higher content in your EVs versus your ICE platforms where, again, especially in China, EVs are really much higher contented still, at least the vehicles that we enjoy, where we play. And we've really strategically went after those platforms in terms of an average transaction value for us, because we see that's where we can add value. That's where we can drive margin. That's where we can drive our niche in the market. That's where we've partnered with the likes of Nio, Xiaopeng and some of our other conquest customers. So we still drive that really as our market niche over there, both in China and on some of the hybrid platforms more abroad in Asia.

Yes. And it seems like there's a lot less risk on EVs there than there might be in the U.S...

Yes. Correct.

Probably upside over time. Sticking on sort of some of the macro stuff. You guys, I remember in the last 3 years, I think maybe at this conference, and you guys were really -- and Jerome, you specifically, were leading the charge on discussions, I think, at the tip of the spear for -- or the early end of the curve, talking to automakers about recoveries. And did a good job, did a really valued job for your company. And I think a lot of people drafted off of you. Some of that discussion is maybe not as necessary because we don't have the same kind of inflation or the same kind of volatility at the moment, although things were not completely back to normal. I'm just curious if you can talk about the current discussions around commercial settlements and true-ups on programs that are going slower than expected or the volumes that are not there relative to where we've landed on sort of the -- the sort of more traditional price down and efficiency discussions?

Yes, I think there's -- maybe if you could just step back a little bit. There are still costs that are built up in the system, especially around the peso is still a challenge. If you convert in Mexico, it's still a very strong currency relative to where it used to be, along with a lot of labor in that region with minimum wage pressures that we're still in active discussions with our customers on. Coupled with, over in Europe, you have energy that's receded, that's still a challenge for us that we're working through, along with labor pressures in Europe, and then coupled with the topic that you brought up around volumes that are just underperforming on a lot of the EV platforms. And so it comes back to us, with our customers, this basket of goods discussion that we have with them, where it's not -- if you comb through our P&L of how much did you get for energy, or how much were you able to obtain for a peso offset, you won't always be able to see that because it's not always going to be a one for one. And so what we really like to point to is, what are we achieving from a business performance standpoint? Are you able to drive positive business performance or a positive sustainability equation through this basket of goods discussion? And we've been able to do that even through COVID, even through this massive energy increase. We still look at -- Mark touched on in his opening remarks, through some of these volume challenges that we're having in '24, even through these slower ramp curves, through the EV challenges we're having, we still fully expect in 2024 to have a positive business equation through this basket of goods discussion with our customers, really looking to offset the labor, offset the peso, offset some of these other challenges through a basket of goods discussion, through positive CI with our customers, through negotiating price downs with our suppliers to drive positive business performance into the business. And that's really how we look at this net positive sustainability equation.

So the discussions are still hot and heavy and...

Absolutely.

And are active and fruitful? There's not -- you're not getting stiff-armed maybe like you would have 10, 20 years ago. I mean they're collaborative discussion going on.

Yes, I think they're collaborative discussions with the customers, and they understand the need to have a sustainable supply base.

And not all of those commercial discussions are the same across the board, right? It varies based on customer, right? So some are more accommodating some are a little tougher, right? So the dynamics are the same as what we felt over the last couple of years, right? It's hard fought, but we're going out there because it's the right thing to do.

I mean, you guys -- I think your aggregate forecast is flat to down on global production, right? So I mean, I think, reasonably conservative, but we'll see where the year lands. Even with that backdrop, you're talking about some margin expansion this year. I guess some of it may be with the help of some of these discussions, but a lot of it is going to be on a micro basis internally. I mean can you talk about those actions, what you're achieving, how sustainable they are and where they ultimately may go in the years to come?

Yes. I think a lot of it is, we talked in the last earnings call a lot about modularity and the things that we're doing and really looking to drive our footprint from high-cost countries, leveraging our metals asset in a way that we've never really looked at leveraging our metals asset and moving content that traditionally would be in a JIT footprint into a metals footprint through engineering that precious space and allowing us to drive content into metals. That's a very sustainable action for us where we can take 30-plus percent of labor out of JIT into our metals plant, shifting that content high cost to low cost. First program launches this year with really direct read across then into multiple projects in North America. We're now actually driving that through. We had very fruitful discussions 2 weeks ago with a very large European customer and doing that same model in Europe, servicing Germany out of our footprint in Hungary, with the same type of concept. And now even in North America, we have 2 customers saying, "Can you use that to displace labor at a competitor's JIT plant by doing operations in your facility in Mexico, at your metals facility?" And so that we see as very sustainable, very sticky, actually, in terms of not only our performance, but unleashing the potential of real CI in our business. So that's actually accelerating. The other thing that we've really been driving, that we've been pretty quiet about, is automation in our foaming operation. So we were the first to market with automation in the placement lines. And that's now fully deployed across our network in the United States, where we've been able to eliminate anywhere from somewhere in the neighborhood of 8% to 10% of direct replacement labor on our foaming operations. Again, that's very sustainable, very sticky. That's now being read across globally. In addition, we have automation on the back end of our foaming lines. And then the other projects that we have, we have automation in our trim plants that we've piloted in our European operations for highly complex trim for a major German OE on their highest-end luxury vehicles and for some of the higher-end quilting processes and higher-end embroidery processes that we're now reading that across globally as well. I'd say in the infancy. But If you look at what that can yield, somewhere in kind of the 10%, 15% range, if we're able to read that across and then driving that forward throughout our trim network. And so that level of automation between trim and foam and somewhere in market share, on the foam side, world's largest foamer, those are truly sustainable actions from a CI standpoint as we read them across, that's how we really continue to drive this margin expansion across the network. So it's not just what I would call brute force negotiation with our customers, but really unlocking that CI, that direct labor dependency, doing away with that, and continuing to drive this continuous improvement mindset across the business. So those 2 or 3 work streams alone we see us propelling forward through '27 and beyond for that margin expansion roadmap.

And a couple of follow-ups to that because there's a lot in there. As far as some of your comments, it sounds like you're allowed to do or you're being tasked with doing more self-sourcing/vertical integration in a way that a couple of years ago wasn't as accepted. I mean, I think we've all been in the industry for a while, you've seen these times where things have been out [indiscernible] to go back and forth. But it seems like more structurally because there are these major tasks for capital, both on a human and dollar basis that the automakers, that they're struggling with, which is not that surprising that they're willing to be like, hey, you guys got this, we trust you, do more of it. How much of an -- I mean, is that happening right now? Is that more sustainable than maybe it has been in the past? And really what are you hearing there? Because it does sound like this is ramping up for a lot of suppliers.

Yes, I think as the automakers look at their own internal resources and capital allocation or human capital allocation, they are putting more into their supply base, and basically saying, find me the best solution that you can to solve the output. And depending on the customer, we are getting more degrees of freedom in the ability to go and solve for this. And it does vary by OE. Certainly, our Japanese customers, which we enjoy kind of largest market share outside of their keiretsus with are giving us a lot of these degrees of freedom to go and be able to do this. That's where our metals footprint is certainly lending us a real competitive advantage. It's where our partnerships with a lot of our comfort system suppliers and our ability to really drive competitive tension in the market with not only some of the traditionals, but also a lot of now the emerging Chinese competitors, is giving us a significant cost advantage versus some of the traditional incumbents. We're seeing that yield some very significant benefits in a very competitive marketplace. So that's yielding some real advantages. So that's an area where we see, with the Japanese, some very advantageous steps. And then I think with the Germans, they're looking at it saying, I've got -- I've got to double down on my efforts to become competitive on EVs. And so for my next cycle that I'm putting out there, they're giving us more autonomy to do what we need to do as well. And then with a couple of the Detroit 3, they're also handing over more control for a couple of their platforms as well, saying, go and find me the best value chain solution that you can, I'll evaluate that where I think I can get to, and then we'll weigh the 2 benefits together. And then if you're more competitive, I'll hand control over to you. So it's more collaborative than it's been historically.

So heading in the right direction.

Yes, absolutely.

And then on the automation side, I think when -- traditionally, and this might be a bias of having looked at things for a long time cut and sew and final assembly of the seat, the trimming of the seat, has kind of always been viewed as something that would be very difficult to automate. Are we getting to a point where that can also be automated and that would pull a lot of labor out, and you can get the same product yield and quality out of that, sort of one step further? Is that possible, or is that what you're talking about?

I think on -- so if you take the cut and sew piece of it, I mean we already have automation in place today on the cut and sew piece of it.

In the application.

Yes. I mean that's in place today on the cut and sew piece of it in our European operations, and even in our Mexico operations, we have levels of automation deployed today in the field, like, moving forward, on certain aspects of the cut and sew. The question is what level can you drive that to? How far can you get to? And that's what we're actively working on. As you then move forward into next step when you then move that up into the JIT plant, what level of automation is then healthy in terms of, today, we have a very, what I would call, fungible asset with the people that are in the plant and when your customer doesn't hit volume, you can then flex those people down and you can flex them up. If you then move to a very high level of automation, you're going to have a fixed asset, and your recovery discussions with your customer then become much more difficult. So I think it's thinking through that. In a trim plant, you can -- you don't have a dedicated trim plant. You have a trim plant that will run 5 different customers and 20 different programs. So you can always flex your labor and, if you're automated, you can then flex that automation. JIT plants are generally somewhat dedicated where you maybe have 2 platforms. So I think it's weighing those 2 different things. I think for us, as we continue down the path of modularity, as we look and we automate our foam plants as an example, the question becomes, can we do what traditionally would be done in a JIT plant where you're skinning the foam or you're putting heater mats on, or you're doing traditional operations that would be done in a JIT plant on the foam, move those to a foam plant and automate them in a foam plant, we are then doing 5 or 6 customer applications in a foam plant in an automated manner, and moving -- kind of reengineering that value chain. And that's what we're more working towards. Because we've already got the modularity piece, can we now get that automated? And that is something where if we leverage our scale that we have on foam, where we just have more scale than anyone else does on the foaming piece of it, can we reengineer that value chain? And that's where we're really aggressively working. Because we have the automation now in the foam piece further ahead than anyone else, how quickly can we parlay that now into a more modular concept?

So with all these actions, it sounds like you're in obviously a very competitive position, leader in seating globally. So I mean, it's not like you're trying to catch up. You're trying to get further ahead, I think, of some of your competition. If you were to think about all these actions versus what's happening in the competitive set, where do they stand? Are they moving as quickly? Does this allow you to kind of maybe expand the gap? But there's an important question because there is the question of the international side, outside of China, right? I mean and then the inside China market with Yanfeng and other baby start-ups. And I think there's been some concern, and I'm not sure this is really going to manifest itself, with some of the Chinese suppliers as the Chinese go global, go with them, much like you guys have with some of the D3 over time and expanded the business well beyond that, Japanese keiretsu suppliers, Hyundai, Mobis, I mean, you have sort of this history of national companies sticking together. But -- so if you talk about everything you're doing competitive set outside of China and then inside of China, then China maybe out to the rest of the world.

Yes. So I mean just a comment on the competitive side. I mean our competitors are highly capable, extremely competent, and it's fiercely competitive. And I have -- and we have, as a company, full respect for, I mean, all of them. I mean they're -- I mean they're extremely, extremely good companies that are all extremely good at what they do. I mean, first and foremost, and I really do mean that. And they all have pieces of business in their portfolio that we would very much like, and I'm sure it's vice versa if they sat up here. And I said that last year sitting in this exact chair. So -- and I really mean that. I think when it comes to how we think about the competitive set, this business really comes down to execution. And what you need to do every day is you need to execute. Because if you're executing because of the intimacy you have with your customer, because, generally, you're 90 minutes away from them, or 120, however your sequencing window is, because of the just-in-time nature, if you're executing every day and you don't give them a reason to look elsewhere, that's always going to be, first and foremost, you have to execute. Execution every day is first and foremost in this business. You have to give them the best quality, on-time delivery every day. Because if you have that plant-to-plant relationship, that's absolutely critical. And then after that, you have to be competitive. And so everything I just talked about, making sure that we wake up and we're focused on driving continuous improvement in the business to drive that level of competitiveness is critical. And I think we have a team that is relentlessly focused on that and making sure we have levels of automation, we're rethinking value chains. we're thinking of how to drive solutions that customers need and that customers really value. And we really focus on, when we sit with our customers, are the actions that we're taking things that you value? And we get a lot of questions on, why haven't you vertically integrated on comfort systems? And that just comes down to, when we sit with our customers, is that something that they value? Is that something that is going to allow us to better service our customers? And the answer we get is always a resounding, they want the ability to disaggregate that value chain. They want the ability to source those as separate. And if they're going to source them as one, then they want us to have the ability to go and really partner with either a Gentherm or an [ AEW ] or a Leggett & Platt or now you have the Chinese, who are fiercely competitive in that market who are very technologically advanced, who are moving faster than any of the incumbents are, and they want a seating supplier to have access to that market. And so they don't want us to have kind of this captive in-house portfolio. And that's the resounding answer we get. And so service your customer and start with what your customer wants. And if we do that, I think then we -- yes, we have to be aware. Will they bring their partners with them. But if we don't give them a reason to go outside, and we have so much scale when you look at how many foaming operations -- setting up a trim plant isn't easy. It's 2,000 people in Mexico or in Morocco. And we have more scale than anyone else does. I mean we have more foaming operations, more trim operations in Europe than anyone else. To overcome that scale is a big hurdle for someone. It's the same thing in the U.S. So could they bring? Yes. And they may bring. But if we execute every day and we're focused on our customer needs, that's what's really important for us to think about.

So if you were thinking about sort of growth over the next 5 to 10 years, and we get talking about the outlook for the year when you think about strategically about the business, what do you think the key driver of growth is going to be? Is this going to be sort of regional expansion, customer expansion, thinking about things sort of horizontally? Or is it potentially are there parts that you could more vertically integrate that would add content over time? I guess it's kind of like customer, regional versus technology versus vertical integration. I mean how should we think about where and how fast you can grow?

Yes. I think you have to kind of cut it by -- maybe cut it by region first and then go kind of across the -- right down the fairway versus adjacencies. So I think if you go by region, I think in the Americas, that -- the Americas region is kind of going to be a flat region for us. Or even if you look back 5 years from now, that region may contract from a top line. But that's only because we're strategically winding off third-party metals business there, which we've always said we would do, but it's only going to start happening in the '25, '26, '27 timeframe. But we're partially backfilling that with very high-calorie JIT trim and foam vertically integrated business.

And when you talk about, you're talking about relative to the industry volume, right? Not in absolute terms...

Yes, exactly. Yes, that's right. And so we really think that that's what fuels the Americas margin expansion, is this wind off of metals. And then we get this higher calorie business that starts to wind down. And that's what drives the Americas. And we continually look in that region, are there opportunities for what I would call right down the fairway type of things to bolt-on in the foam marketplace and the trim marketplace? Because there is still a bit of fragmented capacity in that market. If you then look to Asia, which is really the growth engine for the company there where we see, last year, very nice growth over market, we continue to expect to see that region to grow over market over kind of, I'd say, in the 5% to 6% range growth over market even out into the long-term, really fueled by our footprint with our Asian customers outside of China and then in China, our relationships with the NAVs and our -- today, we're 40% domestic, we'll move over the period to kind of 60% domestic, and we expect that to really propel us. And then looking in that region, are there things we can do through strategic investments with additional partners there, and really feeding that region with capital. That is really the growth engine for the company. And then if you pivot to Europe, Europe is the region where, if you just look at, and I'll talk production, it used to be a 20 million unit production region, now it's kind of in a 16.5 production, used to be an exporter of vehicles, now it's a net importer. That region will kind of continue to, I'd say, shrink for us from a top line, stabilize somewhere maybe at the 25 revenue level. And that's one where I think we've got to look at what does it mean to us from a SG&A structure standpoint, what do we need to do, capital allocation, and how do we drive that region long-term from an overall standpoint of accelerate restructuring as some of our peers have done to just -- to rightsize that region, and we're really digging into that. So that's a regional view. Then top-level Adient, I mean we're always on, I think, to look out because we have this agility on our balance sheet now, we have this agility in our cap structure. Are there things that are right down the fairway for us? And we want to keep that flexibility in our cap structure if something were to become available that we could act on it.

Good segue. So you've done a great job paying down debt for last few years. Balance sheet is in -- optimized, kind of really low leverage relative to the peer group. Cash flow looks pretty strong. It's come through, I think, $300 million. If there's opportunities out there that are maybe bigger than bolt-on, I mean, could you entertain them? Or how do you feel about the current credit profile and leverage? I mean it's an asset to have balance sheet in such good shape.

Yes. I think you're right, Doug, I mean it's the flexibility that we have today that we didn't have 2 years ago, right? So it's even, to be here, having that conversation with you, right, tells you where we've been and where we are today. So we look at all options, right? So we look to see how we're going to generate that value to our shareholders and to our bondholders, right? And so if there is something, as Jerome mentioned, that's straight down the fairway that helps solidify a position for us, let's just say, Asia, outside of China, Japan, sure we'd take a look at that as a bolt-on, right? If there is something bigger that came up, it would really have to make sense for us to really be accretive for the company, right, that we saw not only near-term benefits, but longer-term benefits, right? So we will take a look at that. But again, just doing the work that we've done over the last 2 years to position our capital structure to where it is today allows us to have that conversation.

That's helpful. And there are certain areas in the world where there could be opportunity in...

Absolutely.

I think you're spotting some, okay. That's great.

I have one last question. Is there any questions in the room? We're good? We generally think your stock is pretty inexpensive. But I mean, obviously, there's some people who don't because it's not going up that much. I mean -- so it's always going where we think it should go. As you look at this, and you guys have been around for a while and you've seen a lot of things, what do you think the disconnect is in the perception in the public markets really specifically around the equity versus what you think you're doing? And what do you think ultimately changes that over time? We certainly have our own opinions, but I'd love to hear yours.

Yes. Maybe I'll start, and Jerome, feel free to chime in. But I think to a certain extent, we're still a show-me story, right? So if you think about where we've been and where we're heading, right, obviously, we had some launch issues, manufacturing issues. The thesis at that time was basically back to basics, stabilize the business, right? We did that. We showed that we can improve margins. We're well on that track. Then it came down to fixing the capital structure. We just talked about that. We've been able to do that. Now we're in this period of time where we're generating cash, right? So it's how can you -- how much cash can you generate? Can you sustain that cash generation? And then how is that cash allocated, right? So how are you going to balance the needs between returning to the shareholders, investing in the business, right, doing some, what I'd say, opportunistic debt paydown right, and then keeping some dry powder for some M&A activity, right? And so I think, really, the investors are looking to make sure that we can execute on that plan. Jerome, I'm not sure if you have any other...

No, I mean, I think that's a really excellent summary. I think the only thing I would add is one thing that I think is an underappreciated asset that we have is really our exposure to our Japanese customers where it's a very unique position in terms of being, outside of their keiretsus, their largest seating supplier. It's a very underappreciated asset, but one that when we really do cherish having that relationship with them, one that we nurture largest tech center outside of the Japanese and our Torihama offices. And it's something that I think is just generally underappreciated, especially I mean we have 100% of all of Toyota's truck business, if you look at it. It's just a very powerful thing that we enjoy.

And they happen to be doing very well. Generally.

Yes. Very nice trucks. I'd encourage you all to go and experience that.

With very nice seats.

Yes. With very nice seats.

With very nice seats. Well, that, we're getting low on time, so we thank you very much for the time today. I wish you were actually working on the seats here today. You would actually feel a lot better. But next year, maybe we'll get some Adient seats in here for the conference.

Yes. Sounds good.

Thank you so much for taking the time. Thank you so much.

Yes. Thank you.